2009-04-25

SEATTLE, Washington - The politicians are scraping around for new revenue sources in Olympia, but at least for the moment they have shelved the idea of creating a state income tax on people earning above $250,000 per year.

Now, you're welcome to think that the state should have an income tax (although it would probably drive people like me from the state). There are legitimate pros and cons. But you're a straight-up sucker if you think such a tax would continue to only be levied on the "rich" going forward.

Look at the history of the federal income tax for guidance on this. The first federal income tax created after the passage of the 16th Amendment in 1913 only applied to income above $3,000 (which if you do the math is almost $65,000 in 2008 dollars). The bottom rate was 1% (ONE Percent!), going up to 7% for income above $10,000,000 in 2008 dollars. Given the $3,000 threshold, less than two percent of American households paid any income tax at all at that time.

This tax was pitched as just grabbing a bit from the very very rich, those who could afford it, just as the proposed Washington income tax has been pitched.

Interestingly, when the 16th Amendment was being debated, there was talk of putting a 10% hard cap in the amendment. This was rejected, because it was considered absurd, a total howler, that the income tax rate could ever rise that high. (See here). In fact, by 1918 (under wartime conditions) the top rate had blown right through the inconceivable 10% barrier all the way to 77%.

State governments can't wage war as a justification for raising taxes, so they just institutionalize big spending increases and new programs in good times and then start cooking up ideas for ways to take more money to pay for these things when things sour. This phenomenon is discussed in detail in the excellent cover story from this month's Reason magazine.

Of course, every last penny of the government spending (in programs that sometimes did not even exist a few short years ago) is alleged to be indispensable, crucial to the functioning of a civilized society, kids will be starving in the gutters if anything is cut, etc etc.

2009-04-19

POST FALLS, Idaho - All of the buzz indicates that Terminator: The Sarah Connor Chronicles is going to be canceled after one-and-a-half seasons. Now, who will be the hottest chick on television once Summer Glau is off the air? I won't know because I'll probably again retire from watching TV for 5-10 years.

SPOILER ALERT

Still - if you saw the last episode, you know that this is the time to end the series. Based on how it ended, if they did do another season it's possible that Glau would have to play a human instead of a cyborg. And if that happens, I think dear Ms Glau would end up getting exposed. Let's be honest - we're not talking about acting talent on the level of a Faye Dunaway or Kate Winslet here.

2009-04-13

SEATTLE, Washington - It's looking more and more likely that GM will fire for bankruptcy, in spite of the fact that they've gotten tens of billions of dollars in aid and have been essentially taken over by the allegedly brilliant inner circle of the Obama administration. I was beating the drum for bankruptcy back in November. In fact, it was so obvious back then that a bankruptcy filing with no taxpayer aid was the correct path, even some politicians knew it.

A couple senators mentioned in November that a government cash infusion to GM would just put off the inevitable. Jon Kyl (R-AZ) knew the truth:

Mr. Kyl, the Senate's second-ranking Republican, added, "Just giving them $25 billion doesn't change anything. It just puts off for six months or so the day of reckoning."

Those were tepid comments compared to Richard Shelby (R-AL):

"Companies fail every day and others take their place. I think this is a road we should not go down," said Mr. Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee.

"They're not building the right products," he said. "They've got good workers, but I don't believe they've got good management. They don't innovate. They're a dinosaur in a sense."...."It's not the General Motors we grew up with. It's a General Motors that is headed down this road to oblivion," said Mr. Shelby. "Should we intervene to slow it down, knowing it's going to happen? I say no, not for the American taxpayer."

Normally every word out of the mouths of politicians is nonsense, but note that the Times article is dated November 17, right after the election; you have a window of a couple weeks there where the politicians of the losing party will make sense, before the whole bullshit cycle revs up for the upcoming (i.e. two years in the future) election.

2009-04-11

SEATTLE, Washington - I've given a bit of thought here and there in the last few months to what my life would be like if I was just coming into adulthood today, instead of almost 20 years ago. One of the impetuses for this was a blog post from Neil Best last fall, where he mentioned that his employer asked if he had a business need for the pager that he was issued years ago. Not only did he not know the whereabouts of the pager, but he wondered if young adults reading his post even know what a pager is.

(I rolled with a pager in the mid-1990s).

The internet, of course, is the big deal of my lifetime. I first started accessing the internet in 1994 or so, via dialup, as a 22 year old. I recently chatted up some younger folks at the coffee shop, who have had full-blast internet access since they were 9 or 10 years old; they barely remember a world without it.

Of course the mid-1990s internet was a different place, with primitive web sites (go look at copies of your old favorites) and email lists ruling the day. Today we have blogging and RSS, and you can read from and interact with a large number of people from every nook and cranny of the human spectrum.

Intellectual isolation is a thing of the past. This was brought up recently in a post by Dr Joseph Salerno, discussing how students interested in out-of-the-mainstream Austrian economics no longer have to seek out the tiny number of graduate programs that have an Austrian concentration; they can apply to the best schools possible and still stay in the dialogue on Austrian thought:

When I went to lunch after the panel with four Rothbardian TES members I was not asked once to recommend an "Austrian" graduate program--much to my surprise and delight. Rather the discussion revolved around the pros and cons of the grad programs they themselves had researched and applied to. None of them fretted that he would be "intellectually isolated"--a ridiculous complaint in this age of the Internet , Facebook networking, Mises.org, etc.

This strikes a chord with me. Even as a young, moronic 1st year college student in 1990, I had a budding interest in economics. I took courses from econ professors in my first two semesters, and was then soured on the whole topic for years.

What happened? I ended up with two semesters of indoctrination from unreconstructed Marxist professors* which, even as a young moron, was out of line with my budding intellectual inclinations. The Macro class textbook was a long paean to wise government planning and Keynesian ditch-digging written by Robert Heilbroner and James K. Galbraith. Heilbroner was a socialist for most of his adult life before throwing in the towel and declaring capitalism to be superior; I doubt Galbraith will ever throw in the towel.

My personality seems better suited to being an eccentric small-college professor than my current corporate drone status, and pursuing economics in college to the bitter end might have landed me in such a career. In 1990, I simply assumed that the nature of economics was what was presented to me in my early classes and texts; today, given sufficient interest, I would have balanced the stuff in class with supplementary learning more in line with my expectations and seen that I was not getting exposed to the whole soup and nuts in college.

I've had various chances to correct my trajectory in life (including nearly changing my major in graduate school in 1997), and fumbled the ball every time.

My interest in econ has been recently rejuvenated by reading best-of-breed blogs. There isn't a whole lot stopping me from just throwing it all away and going back to school to do a PhD today, except inertia, my belief that people's mathematical ability erodes over time, and my own trait of not being very adept at long-term, open-ended tasks.

Sound like whining? Yes, I'm whining. I ultimately have no one to blame but myself. My excuses are weak. But my When I Was Your Age lesson is: you can now cook up all sorts of excuses for how your life goes, but having a lack of information, or being exposed to an inadequate spectrum of information or opinions, is no longer an excuse.

* I want to note, these were two of the nicer guys you could possibly meet; in fact one helped me get into the class of the other when it was overbooked. This does not validate the bad economics.

2009-04-06

SEATTLE, Washington - ESPN has drawn quite a bit of ire from some sports fans and sports media pundits about their relentless cross-promotion - it often seems like an ESPN property can't even give you the weather forecast without pitching something coming up soon on a Disney-owned property (Disney being the corporate parent of ESPN). It often goes beyond the boundaries of sports (e.g. all the stars of upcoming Disney movies who mysteriously keep showing up in the Monday Night Football booth).

Today, 710 KIRO officially flipped over to the all-sports "710 ESPN" format, and host Kevin Calabro had to jump in the tank right away. Calabro interviewed John Clayton in the first half hour of his new 3pm talk show, and at the end of the interview he noted that Clayton had to run because he had a segment to do on ESPN television.

By the way, Clayton's popular Saturday morning local show is moving to the new station. The writeup notes that Clayton "is seen, heard and read across nearly all of the company's multimedia platforms", but no mention that he's been hosting a popular and respected local Saturday show on competitor 950 KJR for more than 15 years.

I don't expect 710 ESPN to mention 950 KJR by name, but they should at least acknowledge in the writeup that Clayton is a local - he got his break at ESPN after working for years at the Tacoma News-Tribune.

Dr Boudreax got on the topic as a result of a Newsweek article about Paul Krugman where Krugman notes that part of his original attraction to economics was that it seemed to reveal "the beauty of pushing a button to solve problems." Boudreax noted the hubris of proposing button-pushing "solutions" to address issues in complex market economies - what Hayek called "the fatal conceit".

In response to comments that Krugman is "no dunce" and that he probably has a appreciation of complex markets comparable to his own, Boudreax noted:

A believer in the existence of buttons to push is either overly impressed with his or her own intelligence or simply unaware of the true complexity of any market economy (or both).

It's true that Krugman is no dunce. I have absolutely no doubt that his I.Q. is significantly higher than my own -- and, more relevantly and much more impressively, that it is significantly higher than that of 95 percent of all other economists. But intelligence is not the same thing as wisdom. In fact, I suspect that, after I.Q. reaches a certain (above-average) level, I.Q. and wisdom are negatively correlated with each other. Cleverness becomes mistaken for insight. The two are not at all the same.

This ties back a bit to at least half of my old quip that the smartest and dumbest 25% of the population gravitate to leftist politics - the really smart ones think that they're not only smart enough to run their own life, but to run everyone else's life as well.

Note the end of this post by Judith Warner, where she says that we are now governed by "this book-writing president and his coterie of brilliant advisers." Well, now we're set - the guys in charge should feel free to fire the CEO of General Motors, shake up the board, funnel the production of the company into unwanted "green" technologies, pour billions of taxpayer dollars down the funnel, etc... after all, they're brilliant.*

Dennis Prager has touched on the topic of wisdom over the years - in particular how young people going to college are immersed in the ideology of the people who tend to populate college campuses (definitely of a certain political stripe, and intelligent - college professors are really smart, right?) and assume this is the Correct Way of Looking At The World, without realizing that there are other factors (e.g. wisdom) that come into play when shaping a world-view and values system.

Codicil: Hopefully this Dr Boudreaux is not the same as the one Tom Tolbert discussed on The Jim Rome Show.

* Warner did not endorse those specific policies, she was just swooning over the brainpower of the guys in charge now.